Related Links

OTHER VOICES

Sinkhole solution may not raise rates

Published: Sunday, September 30, 2012 at 6:30 a.m.

Last Modified: Monday, October 1, 2012 at 3:34 p.m.

You may know me as "The Sinkhole Guy," but I'm also the guy that knows how devastating unaffordable sinkhole insurance rate hikes will be for Central Florida.

But there is a solution to this mess.

On Monday, regulators will decide if Citizens Property Insurance Corp. will be able to jack up sinkhole rates 50 percent in Hillsborough, Pasco and Hernando counties, and more than 100 percent in Marion County. This is in addition to an average 11 percent hike on personal lines.

The problem is real. When it comes to sinkhole coverage, Citizens is paying out about double what they are bringing in with premiums. Simple math tells you that Citizens should be raising rates to offset this significant financial shortfall. But that formula is wrong.

There are two ways to repair sinkholes: "underpinning," which is a process where your home is put on underground pilings and will never move again; or "grouting," which is a process of pumping about 30 of those huge concrete trucks full of a concrete material called "grout" underneath your home and hoping that it stabilizes the deep soils.

Grouting doesn't address the foundation of your home, and it also is ridiculously expensive. The average cost to grout a home is $100,000-$150,000. There also is a legitimate question about the impact of grouting on our water tables, surrounding homes and our overall environment.

Underpinning is comparatively cheap — averaging $35,000-$40,000. I've never seen an underpin job fail. In fact, because I know grout alone isn't a permanent solution, I now refuse to grout a home without also underpinning. And I do it for free.

When grout fails, subsequent repairs or settlements are extremely expensive.

Let's go back to the math. Citizens is asking for a 50 percent rate hike. If Citizens would stop grouting all these homes and just start underpinning them, they could save more than half of their repair costs — there would be no need to raise rates, and rates would be actuarially sound with future risk all but eliminated.

It's hard to be fiscally responsible and also blame Citizens for raising rates. But in the case of sinkhole coverage, the contradiction isn't necessary.

If Citizens keeps raising rates, areas of Central Florida will become unaffordable. Fixed-income residents will leave, homes will be condemned, and every resident within driving distance will feel the impact of this shortsighted strategy.

Regulators will decide Monday on how high your sinkhole rates will go — unfortunately, they are basing these hikes on bad math.

I encourage you to email regulators at RateHearings@floir.com today, not only to voice your opinion about rate hikes, but to let Citizens know that being fiscally responsible also is about utilizing the most efficient, effective and permanent sinkhole repairs.

<p>You may know me as "The Sinkhole Guy," but I'm also the guy that knows how devastating unaffordable sinkhole insurance rate hikes will be for Central Florida.</p><p> But there is a solution to this mess.</p><p> On Monday, regulators will decide if Citizens Property Insurance Corp. will be able to jack up sinkhole rates 50 percent in Hillsborough, Pasco and Hernando counties, and more than 100 percent in Marion County. This is in addition to an average 11 percent hike on personal lines.</p><p> The problem is real. When it comes to sinkhole coverage, Citizens is paying out about double what they are bringing in with premiums. Simple math tells you that Citizens should be raising rates to offset this significant financial shortfall. But that formula is wrong.</p><p> There are two ways to repair sinkholes: "underpinning," which is a process where your home is put on underground pilings and will never move again; or "grouting," which is a process of pumping about 30 of those huge concrete trucks full of a concrete material called "grout" underneath your home and hoping that it stabilizes the deep soils.</p><p> Grouting doesn't address the foundation of your home, and it also is ridiculously expensive. The average cost to grout a home is $100,000-$150,000. There also is a legitimate question about the impact of grouting on our water tables, surrounding homes and our overall environment. </p><p> Underpinning is comparatively cheap — averaging $35,000-$40,000. I've never seen an underpin job fail. In fact, because I know grout alone isn't a permanent solution, I now refuse to grout a home without also underpinning. And I do it for free.</p><p> When grout fails, subsequent repairs or settlements are extremely expensive.</p><p> Let's go back to the math. Citizens is asking for a 50 percent rate hike. If Citizens would stop grouting all these homes and just start underpinning them, they could save more than half of their repair costs — there would be no need to raise rates, and rates would be actuarially sound with future risk all but eliminated. </p><p> It's hard to be fiscally responsible and also blame Citizens for raising rates. But in the case of sinkhole coverage, the contradiction isn't necessary.</p><p> If Citizens keeps raising rates, areas of Central Florida will become unaffordable. Fixed-income residents will leave, homes will be condemned, and every resident within driving distance will feel the impact of this shortsighted strategy.</p><p> Regulators will decide Monday on how high your sinkhole rates will go — unfortunately, they are basing these hikes on bad math.</p><p> I encourage you to email regulators at RateHearings@floir.com today, not only to voice your opinion about rate hikes, but to let Citizens know that being fiscally responsible also is about utilizing the most efficient, effective and permanent sinkhole repairs.</p><p> </p><p><I>Taylor Yarkosky owns Advanced Pier Technology, a sinkhole repair company based in Hernando County.</I></p>